BMO says buy this little-known energy stock that's cheap, can jump more than 25%

BMO Capital Markets initiated Weatherford International (WFRD) with an Outperform rating and an $82 price target, implying a 27% upside, despite the stock's 10% year-to-date decline. Analyst Phillip Jungwirth views WFRD as attractively valued at 12.4x forward P/E, citing its strong international portfolio, which generated 81% of 2024 revenues, and its leadership in several niche oilfield services markets. The firm also highlighted Weatherford's robust financial performance, noting its adjusted EBITDA margins outperformed major competitors in 2024 and are expected to remain competitive in 2025 after likely bottoming.

Analysis

BMO Capital Markets initiated Weatherford International (WFRD) with an Outperform rating and an $82 price target, suggesting a 27% upside from its recent close, despite a 10% year-to-date share decline. Analyst Phillip Jungwirth highlights WFRD's attractive valuation, trading at a 12.4x forward P/E, significantly below the S&P 500's 25x, underpinning the optimistic outlook for the energy services firm. This valuation perspective, coupled with the recovery from year-lows, suggests a compelling entry point.

A key driver for the positive outlook is Weatherford's strong international portfolio, which accounted for 81% of its 2024 revenues. This international weighting is expected to provide near-term activity stability and greater long-term upside in the challenging oilfield services sector. The company also holds market leadership in several niche segments, including managed pressure drilling, tubular running services, and artificial lift.

Weatherford's robust financial performance further supports the bullish view, with its adjusted EBITDA margin outperforming major competitors like SLB, Halliburton, and Baker Hughes in 2024. Although 2025 margins are projected to decline, they are anticipated to remain above those of HAL and BKR, indicating a likely bottoming and sustained competitive advantage. This strong operational efficiency positions WFRD favorably against industry giants.

Key Decisions for Investors

• Investors should evaluate Weatherford International (WFRD) for potential long-term positions, considering BMO Capital Markets' Outperform rating and $82 price target, implying significant upside from its current valuation.
• Focus on WFRD's strong international revenue weighting (81% in 2024) and market leadership in niche oilfield services as key drivers for sustained activity and growth, despite broader industry challenges.
• Monitor the company's adjusted EBITDA margins, which have outperformed peers and are expected to remain competitive, indicating robust financial health and operational efficiency.